Bayer, Samsung, Pepsi, Smartphones: Intellectual Property

March 5 (Bloomberg) -- Bayer AG plans to appeal a ruling by
an Indian regulatory board that allows generic-drug maker Natco
Pharma Ltd. to make a low-priced copy of Bayer’s patented
Nexavar cancer medicine.

India’s government last year allowed Natco to produce and
sell cheaper copies of Nexavar, a decision that also pressures
other brand-name manufacturers to lower prices. Bayer had
appealed to the country’s Intellectual Property Appellate Board,
and yesterday was told that it had lost, the Leverkusen,
Germany-based company said in an e-mailed statement.

“We strongly disagree with the conclusions of the
Intellectual Property Appellate Board,” the company said.
“Bayer is committed to protecting its patent for Nexavar and
will rigorously continue to defend our intellectual property
rights within the Indian legal system. We will pursue the case
in front of High Court in Mumbai with a writ petition.”

The government’s decision last year marked the first time
that India allowed a generic-drug maker to manufacture copies of
a medicine that is protected by patents in the country. Under a
World Trade Organization agreement known as Trade-related
aspects of intellectual property rights or TRIPS, member
countries can use these compulsory licenses to ensure access to
affordable medicines, according to Doctors Without Borders,
which supports the government decision.

The appellate board ruling “weakens the international
patent system and endangers pharmaceutical research,” Bayer
said. “The limited period of marketing exclusivity made
possible by patents ensures that the costs associated with the
research and development of innovative medicines can be
recovered.”

Since it began selling Nexavar in India in 2008, the
company has had a program in place to ensure patients have
access to the treatment, Bayer said. The cost of the product is
reduced to about 10 percent of the regular price for 73 percent
of all Nexavar patients, the company said.

Nexavar is used for the treatment of advanced kidney and
liver cancer. The drug had sales of 792 million euros ($1.03
billion) in 2012.

Novartis AG of Basel, Switzerland, has brought a case
before India’s Supreme Court over its cancer treatment Gleevec.
The drugmaker is challenging laws that say new forms of existing
medicines will only be granted a patent if they demonstrate
significantly higher effectiveness.

Samsung to Seek Further Review as Apple Damages Cut About 45%

Samsung Electronics Co. said it will seek a further review
of patent damages awarded to Apple Inc. even after winning a
reduction of about 45 percent of the $1.05 billion amount.

U.S. District Judge Lucy Koh in San Jose, California, on
March 1 cut the damages award after finding that the jury based
its decision on an incorrect legal theory.

“We are pleased that the court decided to strike
$450,514,650 from the jury’s award,” Nam Ki Yung, a spokesman
at Suwon, South Korea-based Samsung, said in an e-mailed
statement yesterday. “Samsung intends to seek further review as
to the remaining award.”

Samsung and Apple have each scored victories in patent
disputes fought over four continents since the iPad maker
accused Asia’s biggest electronics producer in April 2011 of
“slavishly copying” its devices. The companies continue to
battle over patents as they seek dominance of a mobile-device
market estimated by researcher Yankee Group at $346 billion in
2012, even as Apple remains one of Samsung’s biggest customers.

Koh, who previously rejected Cupertino, California-based
Apple’s bid to ban U.S. sales of 26 Samsung devices, also denied
the iPhone maker’s request to increase the jury’s award. The
judge said the amount owed by the Galaxy maker was heavily
disputed, and the jury wasn’t bound to accept either side’s
damages estimate. The jury’s award for 14 other products stands
at $598.9 million, she said.

Steve Dowling, a spokesman for Apple, had said the company
had no comment on the ruling.

Koh ordered a new trial on damages for some Samsung
products. The companies should consider appealing her ruling
before the trial begins, the judge said.

A witness for Apple whose testimony the jury relied on
“presented a theory that the court had ruled legally
impermissible,” Koh said in her ruling. The judge said despite
her explicit instruction that the theory couldn’t be used, “the
amount of the award made plain that the jury had applied the
impermissible theory anyway.”

The case is Apple Inc. v. Samsung Electronics Co. Ltd., 11-cv-01846, U.S. District Court, Northern District of California
(San Jose).

For more patent news, click here.

Trademark

PepsiCo Unit’s Infringement Case Against Ralcorp Crumbles

PepsiCo Inc.’s Frito-Lay unit, the maker of Cheetos and
Ruffles potato chips, lost its intellectual property suit
against Ralcorp Holdings Inc. and its Medallion Foods unit.

The suit, filed in February 2012 in federal court in
Sherman, Texas, was related to Frito-Lay’s Tostitos Scoops!
product, a small bowl-shaped corn chip that can be used to scoop
up salsa, guacamole or other dips.

According to court papers, Frito-Lay has made Scoops! since
2001. The company registered the shape of the product as a
trademark and said the product is covered by four U.S. patents,
one of which covers the design.

Frito-Lay objected to Medallion’s Bowlz corn chips. The
complaint featured a color photo of the two products laid out
side by side on a plain background. It also contained color
photos of the packaging for each product.

The Bowlz product was intended to trade off the goodwill of
Frito-Lay’s Scoops! through its similar shape and packaging,
Plano, Texas-based Frito-Lay said in its pleadings. The two
products are sold on the same shelves in the same retail
outlets, and consumers are likely to be confused by the apparent
similarity, the company claims.

Medallion, based in Newport, Arkansas, was accused of
causing financial and reputation damage to Frito-Lay.

In its March 1 verdict, the jury found that there was no
infringement of the design of the packaging or the chip itself.
It also rejected claims that Medallion had misappropriated
Frito-Lay trade secrets and infringed patent 6,610,344, which
covers the manufacturing process for the Scoops! product.

The case is Frito-Lay North America Inc. v. Medallion Foods
Inc., 12-cv-00074, U.S. District Court, Eastern District of
Texas (Sherman).

For more trademark news, click here.

Copyright

Obama Backs Changing Rules to Let Consumers Unlock Smartphones

The Obama administration said consumers should be allowed
to unlock smartphones and tablet computers without risking
criminal penalties, siding with critics of a ruling from the
U.S. Library of Congress.

More than 114,000 people endorsed an Internet petition to
rescind a decision by the library that took effect in January.
“The White House agrees,” R. David Edelman, senior adviser for
Internet, innovation, and privacy, said in a blog posting
yesterday entitled, “It’s Time to Legalize Cell Phone
Unlocking.”

“If you have paid for your mobile device, and aren’t bound
by a service agreement or other obligation, you should be able
to use it on another network,” Edelman wrote. “It’s common
sense.”

The Federal Communications Commission and the National
Telecommunications & Information Administration, a Commerce
Department branch that advises President Barack Obama on
airwaves policy, will deal with the issue, Edelman said.

The FCC will look into “into whether the agency, wireless
providers, or others should take action,” FCC Chairman Julius
Genachowski said in a statement posted yesterday on the agency’s
website.

The Obama administration wants it to be clear that neither
criminal law nor technological locks should prevent consumers
from switching carriers when they are no longer bound by a
service agreement or other obligation, Edelman said.

Carriers led by Verizon Wireless, the largest U.S. mobile
carrier, and No. 2 AT&T Inc. backed the library’s ruling. Under
the decision made under U.S. copyright law, consumers aren’t
allowed to unlock new mobile phones purchased from wireless
providers.

The Library of Congress’s Copyright Office, as part of a
periodic review, said altering software to let one carrier’s
phones work on other networks wasn’t among activities expressly
permitted under copyright law.

CTIA-The Wireless Association, with members including the
four largest U.S. mobile carriers -- Verizon, AT&T, Sprint
Nextel Corp. and T-Mobile USA Inc. -- had argued that “locking
cell phones is an essential part of the wireless industry’s
dominant business model” involving handset subsidies and
contracts, Librarian of Congress James Billington said in the
notice.

CTIA said in a filing last year with the Library of
Congress that subsidies “depend on ensuring that the handset
will be used, as contemplated, with the carrier’s service.”

Circumventing barriers to unauthorized use “will have
significant adverse effects on the wireless industry and on the
public,” the Washington-based trade group said in its February
2012 filing.

Kim Dotcom Seeks CFO for File-Sharing Site Ahead of Share Sale

Kim Dotcom, the businessman accused of the biggest U.S.
copyright infringement, is seeking a chief financial officer for
his new venture Mega ahead of a potential initial public
offering.

The venture, started a year after his Megaupload.com file-sharing site was shut down, is seeking a New Zealand-based CFO,
Dotcom said on Twitter Inc.’s website, linking to an
advertisement. The site has “aggressive growth plans” and will
pursue an IPO within 18 months, according to the job posting on
the Trade Me Ltd. website.

Dotcom announced Mega in January and began accepting
registrations for the site, which lets users upload, download
and share files including music and video. The website, similar
to Megaupload.com, competes with services such as Dropbox.com
and Google Inc.’s YouTube, Dotcom said.

Dotcom, 39, is fighting extradition to the U.S., where he
was indicted by prosecutors who said his file-sharing website
generated more than $175 million in criminal proceeds from the
exchanges of film, music, book and software files. The site
accounted for 4 percent of Internet traffic, U.S. prosecutors
said in court filings.

New Zealand police raided Dotcom’s rented mansion in
Auckland on Jan. 20, 2012, and Megaupload sites were shut down
worldwide by the U.S. Department of Justice. The businessman had
his bank accounts frozen in Hong Kong and spent four weeks in
jail before winning his release on bail.

Dotcom, who changed his name legally from Kim Schmitz, said
in January the 220 workers at Megaupload will be offered jobs
with the new project. Mega will allow file encryption through an
Internet browser with the user having the only key to unlock the
file, preventing governments and storage providers from viewing
the contents, he said in January.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Empire State Development Says Tax Credit Information Is Secret

Empire State Development, New York state’s economic
development office, has refused a request from the Post-Standard
newspaper to release specific tax credit amounts it has given to
film and television production companies that made just one film
that features New York, the newspaper reported.

Lawyers for Empire State Development said that information
is a trade secret and that the production companies would be
damaged if the amounts were revealed, the Post-Standard
reported.

The development office said it asked the companies if it
was acceptable to disclose the information, and that the
responses overwhelmingly opposed its release, according to the
newspaper.

Robert Freeman, executive director of the state’s Committee
on Open Government, told the Post-Standard he wasn’t impressed
with this argument and that speculation about the possibility of
harm isn’t a good enough reason to deny public access to the
information.